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The free traders also need to accept the reality that the UK’s decline started long before Brexit and disputes about fishing. In terms of per capita GDP, the UK

The free traders also need to accept the reality that the UK’s decline started long before Brexit and disputes about fishing. In terms of per capita GDP, the UK lost its edge over the rest of Europe in the 1970s, and then simply never recovered from the 2008 global financial collapse. Without the empire, the UK’s “competitive advantage” in financial and legal services wasn’t worth shit. I strongly suspect the US cannot maintain its outsized per capita wealth, on the back of the reserve dollar, in a world where China has an economy twice the size. Just as the UK couldn’t when the US economy overtook the British empire and the dollar replaced the pound as the reserve currency. The question, instead, is how we’ll be able to adapt to that new reality. And I suspect we’d rather be Germany in that future than the UK.

matt-p 2y ago
I think Germany is a bit of a special case due to what happened after the war, I think a more objective comparison might be say France.
- hkt 2y ago
  German engineering etc was famously rather good before the war too. The Ruhr valley is part of the reason for this: energy sources (coal) and minerals (iron, copper, etc) very close together. It was the ideal setting for an industrial awakening. Also, even after the marshall plan, Germany kept its existing advantages in industry in large part simply by actually encouraging them to exist. The UK has no industrial policy and actively shed most industries in the 1980s, relying instead on direct investment and deliberately not growing domestic companies.
  - matt-p 2y ago
    It wasn't a criticism of Germany at all, just that I think alot happened there that was special politically with the east and west, support for reunified Germany was massive, it's just therefore a bit hard to say what would of happened if after the war it was lumped with huge debt and ignored.
    - foobarian 2y ago
      Not being allowed a real military, protected by US resources instead, means a huge amount of investment freed up for the civilian sector (similar to Japan/Italy to some extent)
- roenxi 2y ago
  The special case was that big chunks of Germany ended up under the control of capitalists. The pattern in Germany, Japan and even Korea is that in the post-war era the US understood how to build up a country's economy and their policy formula was effective. The observation is depressingly simple - competent economic management leads to great results. Typically that involves investing a bunch into developing industrial capability. Listen to people like Ed Deming. Let people build things. The US isn't doing that, we haven't seen any new industrial capability out of them in decades. Silicon Valley is the closest thing they have in the modern era and it is mostly services. If you ask where the wealth is supposed to come from in the Chinese economy there are a lot of obvious answers - it could be energy innovations from the nuclear or renewable sectors. It could be manufacturing innovation as they work on improving their factories. Maybe they're going to come up with hot new products out of Shenzhen. They're big players in the AI revolution and working to build up domestic semiconductor capabilities. Maybe they're just going to wait for other people to come up with good ideas and copy them with speed and scale on their side. The US has a much less obvious story. Biotech could be an amazing path, but they've left the ring for a lot of the more promising industrial options. And holding the health industry up as being the way to a bright future seems a bit weird. Maybe they succeed in building a services economy that impresses people; that'd be a cool first.
sdwr 2y ago
Yeah this is arguably the tail wagging the dog - Trump is a reaction to the end of US hegemony, not the cause
- watwut 2y ago
  Trump has zero to do with previous level of US hegemony. He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
  - sdwr 2y ago
    "Make America Great Again" - the geopolitics are literally right there on the label!
  - hkt 2y ago
    Americans might not know their number is up explicitly, but they can smell it. The days of US hegemony are numbered. In one way or another, people get it. Why else would they want to Make America Great Again? It is an inherent recognition of decline.
    - pishpash 2y ago
      Yes and no. The MAGA revolution is internally carried by the lower class not associated with and uninterested in geopolitics. In fact they believe in exceptionalism and don't understand why they feel exploited and don't know who is doing it. However it would not be possible politically if not tolerated by the upper class who is smelling decline (of their wealth), because competition has moved into their part of the value chain, so they do two things. One, they now support protectionism to shield from competition. Two, they wish to exploit the lower class harder, so they point them outwards to avoid a physical revolution or an amicable redistribution. If you want to explain MAGA you have to understand it's a convenient alignment of the upper class and the lower class for different reasons.
      - Workaccount2 2y ago
immibis 2y ago
The US appears to be trying to end the reserve dollars. Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Because they're the same thing, ending one of them also ends the other. There does seem to be some sort of cycle in play: first a slave-driver-type economy creates a whole lot of wealth, then people get human rights, then they stop being driven like slaves and coast off the accumulated power, but forget the basic principles of wealth creation in the process (see also "good times create weak men" etc) and just spend all their resources arguing about who gets the wealth that is there instead of creating more. And I'm not saying that in an individualist framework - the reason individuals can't do it is a problem with the whole society, not with those individuals.
- programjames 2y ago
  > Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Can you explain this a little more? Why does having a trade deficit make your currency more valuable? My naive assumption is it would put more dollars in other countries, so they don't need them as much, making dollars less valuable.
  - cowfarts 2y ago
    "Why does having a trade deficit make your currency more valuable?" Its the other way around, having the reserve currency drives demand for it and therefore imports are cheap and budgetary deficits are free (since interest rates are low). You get free stuff and free debt, but over time your industry collapses
  - vitorgrs 2y ago
    Your currency being valuable increase imports!
  - Tarq0n 2y ago
    Other counties need dollars to settle their international trade (particularly oil but practically a lot more), and to hold in reserve. The dollar is actually the only currency that's been printed enough to serve this purpose alongside its other benefits. This demand for dollars makes the US less attractive to import from as the price of the dollar is driven up by this extra demand.

matt-p 2y ago

I think Germany is a bit of a special case due to what happened after the war, I think a more objective comparison might be say France.

hkt 2y ago
German engineering etc was famously rather good before the war too. The Ruhr valley is part of the reason for this: energy sources (coal) and minerals (iron, copper, etc) very close together. It was the ideal setting for an industrial awakening. Also, even after the marshall plan, Germany kept its existing advantages in industry in large part simply by actually encouraging them to exist. The UK has no industrial policy and actively shed most industries in the 1980s, relying instead on direct investment and deliberately not growing domestic companies.
- matt-p 2y ago
  It wasn't a criticism of Germany at all, just that I think alot happened there that was special politically with the east and west, support for reunified Germany was massive, it's just therefore a bit hard to say what would of happened if after the war it was lumped with huge debt and ignored.
  - foobarian 2y ago
    Not being allowed a real military, protected by US resources instead, means a huge amount of investment freed up for the civilian sector (similar to Japan/Italy to some extent)
roenxi 2y ago
The special case was that big chunks of Germany ended up under the control of capitalists. The pattern in Germany, Japan and even Korea is that in the post-war era the US understood how to build up a country's economy and their policy formula was effective. The observation is depressingly simple - competent economic management leads to great results. Typically that involves investing a bunch into developing industrial capability. Listen to people like Ed Deming. Let people build things. The US isn't doing that, we haven't seen any new industrial capability out of them in decades. Silicon Valley is the closest thing they have in the modern era and it is mostly services. If you ask where the wealth is supposed to come from in the Chinese economy there are a lot of obvious answers - it could be energy innovations from the nuclear or renewable sectors. It could be manufacturing innovation as they work on improving their factories. Maybe they're going to come up with hot new products out of Shenzhen. They're big players in the AI revolution and working to build up domestic semiconductor capabilities. Maybe they're just going to wait for other people to come up with good ideas and copy them with speed and scale on their side. The US has a much less obvious story. Biotech could be an amazing path, but they've left the ring for a lot of the more promising industrial options. And holding the health industry up as being the way to a bright future seems a bit weird. Maybe they succeed in building a services economy that impresses people; that'd be a cool first.

sdwr 2y ago

Yeah this is arguably the tail wagging the dog - Trump is a reaction to the end of US hegemony, not the cause

watwut 2y ago
Trump has zero to do with previous level of US hegemony. He represents what large part of Americans are - for internal reasons that have nothing to do with geopolitics.
- sdwr 2y ago
  "Make America Great Again" - the geopolitics are literally right there on the label!
- hkt 2y ago
  Americans might not know their number is up explicitly, but they can smell it. The days of US hegemony are numbered. In one way or another, people get it. Why else would they want to Make America Great Again? It is an inherent recognition of decline.
  - pishpash 2y ago
    Yes and no. The MAGA revolution is internally carried by the lower class not associated with and uninterested in geopolitics. In fact they believe in exceptionalism and don't understand why they feel exploited and don't know who is doing it. However it would not be possible politically if not tolerated by the upper class who is smelling decline (of their wealth), because competition has moved into their part of the value chain, so they do two things. One, they now support protectionism to shield from competition. Two, they wish to exploit the lower class harder, so they point them outwards to avoid a physical revolution or an amicable redistribution. If you want to explain MAGA you have to understand it's a convenient alignment of the upper class and the lower class for different reasons.
    - Workaccount2 2y ago

immibis 2y ago

The US appears to be trying to end the reserve dollars. Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Because they're the same thing, ending one of them also ends the other. There does seem to be some sort of cycle in play: first a slave-driver-type economy creates a whole lot of wealth, then people get human rights, then they stop being driven like slaves and coast off the accumulated power, but forget the basic principles of wealth creation in the process (see also "good times create weak men" etc) and just spend all their resources arguing about who gets the wealth that is there instead of creating more. And I'm not saying that in an individualist framework - the reason individuals can't do it is a problem with the whole society, not with those individuals.

programjames 2y ago
> Something that surprisingly few people have mentioned recently is that having the biggest trade deficit is the same thing as being the global reserve currency. Can you explain this a little more? Why does having a trade deficit make your currency more valuable? My naive assumption is it would put more dollars in other countries, so they don't need them as much, making dollars less valuable.
- cowfarts 2y ago
  "Why does having a trade deficit make your currency more valuable?" Its the other way around, having the reserve currency drives demand for it and therefore imports are cheap and budgetary deficits are free (since interest rates are low). You get free stuff and free debt, but over time your industry collapses
- vitorgrs 2y ago
  Your currency being valuable increase imports!
- Tarq0n 2y ago
  Other counties need dollars to settle their international trade (particularly oil but practically a lot more), and to hold in reserve. The dollar is actually the only currency that's been printed enough to serve this purpose alongside its other benefits. This demand for dollars makes the US less attractive to import from as the price of the dollar is driven up by this extra demand.